NEW YORK (Reuters) - The only three insurance companies in
Louisiana that sell healthcare policies under President Barack
Obama's healthcare law throughout the state are rejecting
payments from a federal program intended to help low-income HIV
patients, advocacy groups said on Thursday.

The Louisiana Health Cooperative and Vantage Health Plan,
two smaller insurers, made the move following a decision by the
state's largest insurer, Blue Cross and Blue Shield of
Louisiana, late last year to reject the payments.

Lambda Legal, a non-profit group, filed a civil rights
complaint about the two smaller carriers' action with the Obama
administration on Thursday, following a similar complaint about
Louisiana Blue last week.

"Additional carriers are jumping on the discrimination
bandwagon," said Susan Sommer, director of constitutional
litigation for Lambda Legal, which works to protect the civil
rights of lesbians, gay men and people with HIV. "The worst
nightmare for people with HIV-AIDS is coming true in Louisiana:
they're being turned away in what's become a race to the bottom
by insurers."

The issue involves the federal Ryan White HIV/AIDS Program
which, for 23 years, has made grants to states, cities and
nonprofit organizations to help low-income people with HIV
purchase health insurance.

The organizations assumed the federal money could be used to
pay premiums for Ryan White beneficiaries who purchased private
coverage on insurance exchanges created by the Affordable Care
Act (ACA), just as the funds had been used to pay premiums
previously.

In recent weeks, however, Blue Cross and Blue Shield of
Louisiana began rejecting Ryan White payments sent on behalf of
impoverished HIV-AIDS patients who had enrolled in one of its
Obamacare plans, as did Blue Cross Blue Shield of North Dakota.

The insurers told healthcare advocates that guidance issued
by the Centers for Medicare and Medicaid Services, the lead
Obamacare agency, prevented them from accepting third-party
payments for the new health plans, even when the funds came from
a government program.

That guidance, issued in November, was meant to prevent
self-dealing or even fraud. "The worry was that a hospital, for
instance, would sign up and pay (Obamacare) premiums for their
uninsured patients," said law professor Mark Hall of Wake Forest
University. If a hospital also steered patients toward an
insurer that includes it in its network, the hospital would turn
a charity patient into a paying one, something CMS regards as a
form of prohibited self-dealing.

Last week, CMS said the ban on third-party payments "does
not apply" to those made on behalf of Obamacare enrollees by
"state and federal government programs or grantees (such as the
Ryan White HIV/AIDS Program)."

Over the weekend, CMS went further, saying it "is
considering amending the rules to require," and not merely
allow, "issuers to accept these (Ryan White) payments."

On Thursday, Louisiana Blue nevertheless said it will stop
honoring Ryan White and other third-party payments for premiums
beginning March 1. The policy, it said, is "a safeguard against
. . . patient steering and other fraudulent activity," adding
that it knows "from experience that there are people who want to
game the system."

ADVERSE SELECTION

Louisiana Health Cooperative has said it "will not be
accepting third-party insurance premium payments either," said
Lucy Cordts of the NO/AIDS Task Force. Her group, which
advocates on behalf of people with AIDS, has an estimated 350
Louisiana residents who chose Coop plans. "They'll all now need
to consider another company."

Other healthcare advocates said they had informed Louisiana
Health Cooperative officials that CMS allows Ryan White payments
to be used for Obamacare insurance premiums, and were told that
"they would not change their policy unless required," said
Moriba Karamoko, director of the Louisiana Healthcare Coalition.

Coop spokeswoman Anisha Williams declined to comment.

The third carrier selling Obamacare insurance throughout
Louisiana, Vantage Health Plan, informed the state that it, too,
will not accept Ryan White payments. A spokesperson for the
physician-founded company did not return messages seeking
comment.

Insurance experts point out that once one carrier in a
market institutes policies that drive away potentially high-cost
customers such as people with HIV-AIDS, other carriers feel
pressure to do the same for fear of being the only one to cover
them, a situation called adverse selection.

Last week, Lambda Legal filed an administrative complaint
with the Office of Civil Rights of the U.S. Department of Health
and Human Services, CMS's parent agency, against Louisiana Blue.
On Thursday it filed complaints against Vantage and Louisiana
Health Cooperative, arguing that their refusal to accept Ryan
White payments flouted a key provision of the ACA, namely its
requirement that insurers accept any customer regardless of
health status.

"What we're seeing in Louisiana is a crisis for low-income
people with AIDS," said Lambda Legal's Sommer. "These are
exactly the people the Affordable Care Act was designed to
provide a safety net for."

One patient who enrolled in a Louisiana Blue plan learned in
December that the insurer would not accept Ryan White checks for
his premiums.

"So now I am without insurance," said Mark, 44, a former
high-school teacher who is unemployed and asked that his last
name not be published. He was able to obtain HIV medications
from the NO/AIDS Task Force, through the Ryan White program. But
he cannot afford medications for high cholesterol and high blood
pressure that are common side effects of HIV drugs.

"My health is in danger at this point," he said. "If we sit
back and let them do this, it goes against everything the
Affordable Care Act is about."